Category
- Band stories
Written by
Son Yang (Director)
Date
Empty
This article was contributed to the 'That Time Investing (I Decided to Invest Then)' column by the Chosun Ilbo reporters who know a bit.
[Yongjae Kim of Nori and the Logistics Startup]
At the end of 2021, I joined Base Investment as an investment reviewer. After working at LINE and Google and moving into VC, the types of companies I most wanted to invest in could be summed up as B2C, global, and software. Those were the fields I had observed, learned, and thought about, and I didn’t have much interest or confidence in businesses that require high fixed costs or need economics managed and forecasted in great detail. Especially after six months into the job, the overall investment market rapidly cooled, and seeing existing logistics startups both large and small struggle, the idea that I would invest in a logistics startup never even crossed my mind. At least, not until I met CEO Yongjae Kim.
In September 2022, Partner Junyeol Kang at Base posted a message on Slack with a deck.
“This is a new company founded again by Yongjae Kim, who started Nori. Anyone interested?”
Base, by structure, is actually the opposite of other VCs: even the CEO or a partner can’t proceed with a deal directly without a reviewer. If no one replies to that message within a week, it is considered internally dropped.
I already knew the education startup Nori, and I was drawn in by the fact that the founder was a serial entrepreneur, so I opened the deck. But it turned out to be a logistics business. 'Why?' I was honestly quite surprised by Deliverus at first, because I couldn't imagine that a founder who had sold his education software company to Daekyo would, in such tough times, start again with a logistics business that requires so much capital.
[Making All Parcels Fast Delivery]
But the problem they set out to solve was intriguing. The Korean parcel market grows by double digits every year, reaching 8 trillion won in sales and 4.9 billion shipments—a massive market. Of this, Coupang's fast delivery only covers about 20% by volume; the remaining 80% use regular couriers. The idea was to offer rocket/same-day delivery solutions to this remaining 80%. Making all parcels as fast as Coupang? Of course that would be great. But does it make sense? If it were as easy as it sounds, why don’t the existing couriers do it? I met CEO Yongjae Kim with these questions in mind.
The typical process for collecting and delivering parcels involves a combination of various agencies and terminals. There are all sorts of interests involved in this process, and since it took a very long time and a lot of money to build this system, for existing courier companies, it’s not that easy to just change things. That’s also why there’s a recurring meme about parcels getting stuck at Okcheon Hub (it’s worth a Google—lots of funny stuff comes up).
But the gist was, by handling only small parcels (clothes, cosmetics, books, etc.)—which make up 80% of total volume—filling up trucks to the max, using highly efficient sorters and spaces optimized for small goods, then applying an AI-based route optimization algorithm (AI deep learning dynamic clustering) every day based on client shipping info and local data, and executing efficient last mile delivery—that would work. With this, there'd be no need for huge, complex facilities, equipment, trucks, or processes, and both fixed and variable costs would be low enough to match current courier prices but still offer same-day delivery, even with room for profit. But the CEO explained all this so clearly and gently during our first meeting that, honestly, I wasn’t that convinced. I kept thinking there had to be a flaw somewhere and it couldn’t possibly be so easy. That’s how things stood for a few days.
Deliverus' Gwangju Logistics Hub
[A Structure Where Everyone Wins]
In the meantime, Deliverus would randomly come to mind. While juggling reviews for about 10 to 20 startups at once, I kept thinking that none of the founders I met at the time had thought so deeply or understood the core of their business like CEO Yongjae Kim. I was curious about the CEO and also wanted to dig into this area that I’d normally avoid, but I felt 'making all deliveries fast' is the kind of future everyone wants. This would be a Win-Win-Win-Win for the shippers, consumers, drivers, and Deliverus alike, if it worked. I thought it was totally in line with counter-positioning and switching costs, like the strategies introduced in the book 'Seven Powers.' I felt it would be neglectful of my duties as an investment reviewer to just let this go based on nothing.
With those thoughts, I went to see the automatic parcel sorter in Seongsu-dong for myself, and as I witnessed Zigzag—the first customer—having their parcels delivered the same day, I grew increasingly convinced. I remember sitting face-to-face with the CEO for a long time, talking about Kim Yongjae as a person.
We talked about why he went to architecture school, why he chose strategy consulting, why he started an education business, why he’s doing it again, and why he’s chosen logistics in particular. One thing that struck me during our conversation was when he said, “The current hypothesis and idea don’t need to prove their utility, which I like.” With Nori, it took so long to prove it was something the world needed, but with Deliverus, just by its structure being Win-Win-Win-Win, he believes it can become big in the market much faster and larger.
Another interesting part was the shareholder registry of this company. Before getting any institutional investment, there were already quite a few individual shareholders. They were all CEO Yongjae Kim's family, colleagues, and friends. The investment terms for these individuals weren’t even particularly favorable. I was struck by how many people trust and like CEO Kim—and could really sense the responsibility he feels for them.
[From the First to the Second Investment]
Early investment committee review for a logistics startup whose economic hypothesis wasn't fully proven was just as tough as expected. There was little for a reviewer to say in response to comments like, “It won’t turn out as projected,” and “Even failed logistics companies had convincing projections.” So I used a Super Pass to get it through. At Base, investment approval usually requires at least three out of four decision-makers, but with only two supporting, the reviewer can use the Super Pass—within their annual quota—to approve a deal. I used my Super Pass because of the enormous market, clear value proposition, and my trust in the CEO.
But as always, things didn’t go as smoothly after investing as I’d hoped. No company exactly matches its projections—about 98% fall short, and maybe 2% greatly exceed them. Almost none match them exactly. For Deliverus, onboarding of scheduled clients was slow, meaning cargo volume didn’t pick up quickly, and monthly losses remained high. Fixed costs were large, with the expansion from Seongsu to Icheon and the purchase of additional sorters. I was anxious and uneasy in this situation, but CEO Yongjae Kim remained calm and adaptable. He truly knew what mattered, always had good answers for tough questions, and kept making swift adjustments based on those answers. With nonstop experimentation and improvements on the two levers—customer profiling/sales and delivery efficiency—the business was showing rapid, significant growth every month. As a result, they now have a system where, on average, deliveries are completed in seven hours after payment, and their logistics system is being actively used by not just major clients such as Always, Musinsa Studio, Zigzag, and Xexymix, but also many small and mid-size clients. And so, fifteen months after the first investment, I made a second one, with much greater conviction.
[Make Crazy Dreams Great]
Recently, to clarify Base’s identity, we came up with a new internal slogan (and for the same reason, changed the company name from Base Investment to Base Ventures).
‘Make Crazy Dreams Great’
It reflects our commitment to making the founders’ often reckless, huge, naive, and even seemingly impossible crazy dreams into something great by dedicating all of Base’s unique and diverse resources. This is why the top criterion for Base when reviewing investments is, ‘Does the founder have a crazy dream?’
‘Same-day delivery for all parcels’ is a crazy dream no matter who hears it. Without going too much into detail, CEO Yongjae Kim showed just how far he’d go for that crazy dream by burning hundreds of millions of won of his own money testing its initial hypothesis. And although it started with same-day delivery, now you can see this seasoned CEO’s dream getting bigger—to the level of building a logistics infrastructure that reaches beyond space.
The most innovative new service of the last decade has unquestionably been Coupang’s Rocket Delivery. In a market where the average person uses delivery services 127 times a year, I’m eager to see how much impact Deliverus will have on our lives as it grows.
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Jungsoo Song
잘 읽고 있습니다. 한가지만 의견 드리면, 블랙 배경에 화이트 텍스트라 눈이 금세 피로해 지는 것 같습니다. 기고글 만이라도 흰배경이나 다른 컬러 적용하면 어떨 지 조심스럽게 의견 드립니다. 감사합니다.
S
Son Yang
안녕하세요, 의견 감사드립니다. 수정이 늦었지만 우선 흰배경으로 다시 설정해 보았습니다. 감사합니다.
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